Is It Legal to Deny PL Encashment for Probationary Employees Terminated for Poor Performance?

Dear All,

I am working in a BPO. We terminate employees who are not performing. My management is not giving PL encashment to those employees who are getting terminated in probation because of nonperformance or underperformance. Is it legal? Can they refuse to give PL encashment if they terminate a probationer for not performing or not meeting expectations?

Kindly guide me on this.

Thanks.

Dear Anonymous,

There cannot be two laws, i.e., one for performers and another for non-performers. If you are terminating someone's services, then leave encasement should be paid not later than the second working day after termination.

Understanding Leave Encashment and Legal Considerations

Check the Shop and Establishment Act of the state where your offices are located. They have rules regarding leave and the encashment of the same upon termination. In most cases, the number of days of leave allowed depends on the number of days an employee has worked. In most states, those working for less than 90 days are not eligible for any paid leave. In such cases, there is no question of encashment during termination.

If your probation period has exceeded the above criterion, then only the employee is eligible for it.

You also need to see the standing orders and the provisions of the Shop and Establishment Act, and refer to clauses that define when leave is to be credited to the employee's account. In most cases, this credit only occurs at the end of the year of work. If that is the case, there is no leave encashment to be paid since they have not worked for a year.

However, in all cases where there is a credit of leave or where they are eligible to have a credit of leave, encashment is generally provided for in the act.

Some states require encashment only for those employees who were denied leave in the earlier period.

Hello Anonymous,

There should not be different laws for performers and non-performers in any organization. Here PL is also known as earned leave by employees. So, according to the available Standing Orders of the company, you can provide PL encasement to each and every employee, irrespective of whether they are a performer or a non-performer. According to the law, any employee who has served at least 180 days is eligible to earn PL.

Actually, in my previous companies, we used to give PL encashment in FnF. However, here, Sales Managers who are seniors misguide our Directors by suggesting that if anybody is not performing and not earning for us, then why pay that person the salary as well as PLs. This is actually a wrong practice. Since they are not aware of Labor Laws, I have taken the initiative to change their mindset. Your valuable comments will definitely help me in this. Thanks a lot for your replies.

Regards